Life Insurance for Children: What You Need to Know
You do everything you can to protect your kids and their future — including their financial well-being. That’s why life insurance, even at a young age, is so important.
Designed with affordability in mind, a DreamSecure Children’s Whole Life Insurance policy is a simple way to help your children protect their own financial future. Because someday, they’ll live for someone else, too. Take a look at how life insurance from American Family Life Insurance Company can help protect your child’s financial future.
What Is Children’s Life Insurance?
Children’s Whole Life Insurance from American Family Life Insurance Company is protection that can last a lifetime. Parents or grandparents often take out a life insurance policy for children as a way to get their child started on securing their financial future. Getting them started early helps them lock in a lower premium rate and start building cash value.
Why Buy Whole Life Insurance for a Child?
Here are just some of the reasons why a DreamSecure Children's Whole Life Insurance policy for your child or grandchild may be the right choice:
Long-term protection at lower premiums
Since the cost of life insurance depends largely on age and health, purchasing a policy when they’re young can lock in a lower premium.
The security of future insurability
Buying life insurance for a child now not only provides lifelong coverage 2 but will also allow them to buy additional life insurance at certain times in the future when their needs change, regardless of health changes.
Cash value that grows
As your child grows, the cash value of the policy builds. So the earlier you start, the sooner the policy can start to build cash value.
It can be easy to find a Children’s Whole Life Insurance policy that fits your life and your budget.
How Much Is Children’s Life Insurance?
American Family Life Insurance Company offers three coverage levels: $25,000, $50,000 or $75,000, with 10 and 20-year payment options.
A 10-year payment option 1 means a slightly higher premium, but you may be able to pay it off before your child ventures out on their own.
A 20-year payment option is fully paid for in 20 years, and the premiums are more affordable than the 10-year payment option.
Whichever option you choose, your premiums will never increase. And once the payments are done, the coverage is there forever. 2 Now that’s peace of mind.
A DreamSecure Children’s Whole Life Insurance policy from American Family Life Insurance Company is protection that can change as your child’s needs change. With the built-in Guaranteed Purchase Option Benefit† additional coverage can be purchased on the insured with no additional medical exams. This coverage can be added at specific ages or when major life events take place, including marriage, becoming a parent or buying a house. This makes it easy to get the coverage they need at different ages and stages of life.
What Is Cash Value in Life Insurance?
Cash value is an insurance policy’s built-up value over time. This value comes from the premiums you pay toward your policy and can be borrowed from or paid out if you cancel your policy.3 The cash value in your life insurance policy accrues on a tax-deferred basis, meaning you don’t have to pay taxes on the growth while the cash value remains in your policy. Learn more about the living benefit of cash value.
Should I Buy Whole Life Insurance for My Child?
Now that you know the benefits of a whole life insurance policy for children — cash value, future insurability, lock in lower premium, etc. — it’s up to you to decide the value in how it will benefit your child. Purchasing a whole life insurance policy for your child can be a great gift to them and their future for its sound protection and cash value growth.
Ready to take the next step in planning for your child’s financial future? Contact your American Family Insurance agent today — they’ll answer your questions and help you find the right policy for you and your child.
1 The 10-year payment option for the DreamSecure Children’s Whole Life Policy is a modified endowment contract. This means that pre-death distributions will generate taxable income to the extent there is taxable gain on the policy. A 10% federal tax penalty applies to the taxable amount of a distribution received before the policyholder reaches age 59-1/2. Neither American Family Life Insurance Company nor its agents are authorized to give tax or legal advice. You should consult a tax advisor for any questions you have regarding a modified endowment contract.
2 Children’s Whole Life Insurance policies mature at age 121. If alive at age 121, the policyowner will receive the surrender value of the policy in force at that time.
3 Any loans taken from your life insurance policy will accrue interest. An outstanding loan balance (loan plus interest) will be deducted from the death benefit at the time of claim or from the cash value at the time of surrender. If the loan balance grows too large for the cash value to support it, the policy could terminate.
† The information described in this brochure is subject to policy terms and conditions. The Guaranteed Purchase Option Benefit may be exercised only at specified dates and life events and is subject to benefit amount limitations. See policy for additional details.